Friday, October 29, 2010

Malaysia: FTA with Australia possible by mid-2011
The free trade agreement (FTA) talks between Australia and Malaysia are likely to be concluded by mid-2011. The eighth round of FTA talks between Australian and Malaysian officials ended last Friday in Canberra. According to Australia Malaysia Business Council national president Larry Gould, both countries are likely to come to an agreement in the middle of next year. (StarBiz)

Japan: Bank of Japan to cut economic forecasts
The Bank of Japan was expected to trim its economic forecast and predict a very slow exit from deflation, signaling it is ready to ease policy further if the strong yen threatens to stunt growth. The central bank would also detail its JPY5trn (USD61.46bn) asset buying programme announced early this month and might say that it would kick off before its next rate review in November, sources familiar with the BOJ’s thinking said. (StarBiz)

Australia: RBA records largest-ever valuation loss on currency
The Reserve Bank of Australia said it recorded a valuation loss of AUD3.8bn (USD3.7bn) in fiscal 2010, its largest ever, as the nation’s currency surged. The RBA said in its annual report released that underlying earnings in the 12 months ended 30 June were AUD866m, leaving a net loss of AUD2.9bn for the year, after an AUD8.8bn profit a year earlier. As a result, no dividend will be payable to the government for the year, it said. A 12% rise in the Australian dollar against other currencies held in its reserves meant that foreign interest earnings were worth less in local dollars, the report showed. Underlying earnings were AUD1.28bn less than the yearearlier period and were the lowest since 1983, the report showed. (Bloomberg)

UK: House prices fell to eight-month low in October
UK house prices fell in October to the lowest level in eight months as the deepest government spending cuts since World War II sapped confidence, a report by Nationwide Building Society showed. The average cost of a home dropped by 0.7% from September to GBP164,381(USD259,000), the lowest since February, Britain’s biggest customer-owned lender said. From a year earlier, prices increased 1.4%, the least since September 2009. (Bloomberg)

EU: Economic confidence improves more than forecast
European confidence in the economic outlook improved more than economists forecast to the highest in almost three years in October, led by manufacturing sentiment. An index of executive and consumer sentiment in the 16 euro nations rose to 104.1 from 103.2 in September, the European Commission in Brussels said. That’s the highest since December 2007 and exceeded economists’ forecast for a reading of 103.5, based on the median of 26 estimates in a Bloomberg News survey. (Bloomberg)

US: Jobless claims fall in sign US job market mending
Claims for jobless benefits unexpectedly dropped last week to a three-month low, a sign the US labor market may be starting to mend. Initial jobless claims decreased by 21,000 to 434,000 in the week ended 23 Oct, the lowest since early July when fewer auto plants than normal closed for retooling, Labor Department figures showed in Washington. The total number of people receiving unemployment insurance dropped to a two-year low, while those getting extended payments also fell. (Bloomberg)

US: Fed asks dealers to estimate size of debt purchases
The Federal Reserve asked bond dealers and investors for projections of central bank asset purchases over the next six months, along with the likely effect on yields, as it seeks to gauge the possible impact of new efforts to spur growth. The New York Fed survey, obtained by Bloomberg News, asks about expectations for the initial size of any new program of debt purchases and the time over which it would be completed. It also asks firms how often they anticipate the Fed will re- evaluate the program, and to estimate its ultimate size. (Bloomberg)

Mortgage cap decision soon
Bank Negara Malaysia may make it harder for Malaysians to buy more than two houses as it seeks to stem speculative buying that is pushing up property prices. Sources said the central bank would be meeting with banks next week to discuss plans for a mortgage cap whereby loans would be limited to a portion of the property value. "The expectation is a cap of about 70%-80%. We think a directive will be issued to cap," said two sources with knowledge of the meeting. Earlier, Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz said it was prepared to take pre-emptive action and that it has wide-ranging instruments to prevent a property bubble. "We want to promote house ownership, but we want it to be done in an orderly manner and we don't want speculative activities," she told reporters on the sidelines of the Global Islamic Finance Forum in Kuala Lumpur yesterday. (BT)

MAHB signs joint deal on Maldives airport
Malaysia Airports Holdings (MAHB) yesterday signed a joint-venture agreement with GMR Infrastructure Ltd and GMR Male International Airport Ltd (GMIAL) for the rehabilitation, expansion, modernization, operation and maintenance of Male International Airport, Maldives. MAHB told Bursa Malaysia yesterday that it was based on a build-operate-transfer model. The tenure of the concession is 25 years starting from the handover date and may be extended by another 10 years subject to mutual terms and conditions between the relevant parties. Based on the expected construction cost of USD373m, the cost attributable to MAHB (by way of equity contribution and/or contingent liabilities for shareholder’s support and/or corporate guarantees, if required) is about USD86m. MAHB and GMR Infrastructure will subscribe for shares in GMIAL based on the shareholding percentages of 23% and 77%, respectively. (StarBiz)

Bursa unfazed by SGX-ASX merger
Bursa Malaysia does not expect the proposed merger between the Singapore Stock Exchange (SGX) and Australian Stock Exchange (ASX) to affect the local bourse's performance and competitiveness. Chief executive officer Datuk Yusli Mohamed Yusoff said this is due to Bursa Malaysia's unique features, competitive products and new offerings. Yusli did not elaborate on the unique features. He spoke to reporters after delivering a keynote address at the final day of the Global Islamic Finance Forum in Kuala Lumpur yesterday. "We will make sure the products and services we offer are of interest to both foreign and local investors," he said, noting more products will be introduced. (BT)

Southern Acids to unlock value of land in Kota Kemuning
Southern Acids (M) (SAB) is set to unlock its holding of 644.49 acres of land bordering Kota Kemuning, Shah Alam, although its board of directors is still exploring its options. “There are plans to unlock the value but the board has not decided what to do. Nothing is finalized yet,” said SAB chairman Tan Sri Low Boon yesterday. Low said while there is “no shortage of suitors” for the land known as Thangamallay Estate, which is home to its palm oil plantation, he stressed that the board is evaluating all available options before making any decision in the next three to six months. (Financial Daily)

Loh & Loh to be delisted
Javace SB, which has made a mandatory take-over offer to acquire all shares in Loh & Loh Corp, has received valid acceptances resulting in it and the parties acting in concert holding 65.84m shares in Loh & Loh. This represents 96.82% of the issued and paid-up capital of the company, Loh & Loh told Bursa Malaysia yesterday. The offerors do not intend to maintain the listing status of Loh & Loh in the event it holds 90% or more of the issued and paid-up share capital. Hence the shares of the company will be suspended from trading on 8 Nov, and its listing status will be withdrawn from the official list of Bursa Malaysia.(StarBiz)

Petronas to expand Malacca refinery
Petroliam Nasional (Petronas) plans to expand and upgrade its Malacca refinery to produce higher-quality fuel and meet rising demand after recently raising the plant’s capacity to 290,000 barrels per day (bpd), industry sources said. Upgrades would allow Petronas to process more sour crude at the refining complex as the country’s sweet crude production declined, one of the sources said. The study, which would determine the capacity and investment costs, was expected to be completed in first-quarter next year, he said. The expansion would be carried out at the refinery’s Train 1, which has a design capacity of 100,000 bpd but operates at 120,000 bpd, the source said. (StarBiz)

Exxon, Shell profits bubble higher with oil prices
LONDON/HOUSTON, Oct 28 (Reuters) - The world's biggest oil companies, Exxon Mobil and Royal Dutch Shell , reported sharply higher third-quarter profits on Thursday, beating analysts' forecasts, as rising energy demand drove up oil and gas prices and fattened refinery margins.
Oil prices climbed 12 percent in the quarter from a year earlier on the back of the global economic recovery and strong demand from China, which became the world's largest energy user this year.

COMMODITY MARKETS: Most markets up modestly as dollar tumbles
NEW YORK, Oct 28 (Reuters) - Commodities rose on Thursday on better-than-expected U.S. job indicators but gains in oil and most raw materials did not match the sharp drop in the dollar due to uncertainties about factors ranging from Fed easing to the outcome of U.S. Congressional elections.
"Are we seeing the inverse relationship between the dollar and commodities beginning to fray somewhat? For sure," said Adam Sarhan, founder of New York's Sarhan Capital, which oversees about $100 million in client assets.

GLOBAL MARKETS: Stocks mixed, dollar falls before elections, Fed
NEW YORK, Oct 28 (Reuters) - Global stocks rose despite Wall Street's mixed finish and the dollar's slide on Thursday as investors pulled back before expected upheaval from next week's U.S. elections and the likelihood of more monetary easing.
"Perhaps this is going to be a 'buy the rumor, sell the news' kind of deal where we have had the rally in anticipation of all these things," said Phil Orlando, chief equity market strategist, at Federated Investors in New York.

OIL: Crude falls before U.S. economic growth data
SINGAPORE, Oct 29 (Reuters) - Oil fell to below $82 ahead of U.S. third-quarter GDP data due later on Friday, the last major economic cue for markets before the Federal Reserve outlines steps to boost recovery in a meeting next week.
The United States is expected to show a 2 percent increase in third-quarter GDP growth, up from 1.7 percent in the second, due to higher consumer spending, a Reuters poll showed.

PRECIOUS-Gold recovers as dollar weakens ahead of Fed meet
LONDON, Oct 28 (Reuters) - Gold rose back towards $1,330 an ounce in Europe on Thursday as fresh dollar weakness arrested the previous session's decline, but trading was cautious ahead of Federal Reserve talks on monetary easing next week.
"Our colleagues on the FX side think the numbers that are circling in the market on QE measures are far too high, we expect some lower numbers, and that will probably help the dollar," said Commerzbank analyst Daniel Briesemann. "That could weigh on precious metals prices."

FOREX-Dollar slides, short-covering rally sputters
LONDON, Oct 28 (Reuters) - The dollar slipped on Thursday, relinquishing some of the gains made earlier this week as a short-covering rally ran out of steam and U.S. Treasury yields fell.
"We'd seen a short squeeze in the dollar in the past few days due to exhaustion in positioning, but when there's no incentive to maintain that, you get some profit taking," said Peter Frank, currency strategist at Societe Generale.

U.S. wheat rises for 5th session on weather concerns
SINGAPORE, Oct 28 (Reuters) - Chicago wheat futures ticked higher, rising for the fifth straight session, as concerns over bad weather in the United States and Australia continued to support the market.
"In the last few days, the market has drawn support from relatively weak U.S. crop conditions," said Luke Mathews, commodity strategist at Commonwealth Bank of Australia.

Asian stocks rebound; yen unmoved by BOJ
SYDNEY, Oct 28 (Reuters) - Asian stocks rebounded after having suffered their biggest one-day fall in four months, while the yen held firm against a broadly weaker dollar, taking details of the Bank of Japan's stimulus plan in its stride.
"What stands out is that the BOJ rescheduled its next meeting, bringing it forward, which suggests the central bank wants to make sure it can take action if needed after the FOMC," said Takeshi Minami, chief economist at Norinchukin Research Institute, referring to the U.S. central bank meeting on Nov. 2-3.

Fall In Corn Production Weighs On IGC Grain Outlook (Source: CME)
World grains markets are expected to tighten in the 2010-11 season as consumption outpaces supply for the first time in four years, the International Grain Council said. While the IGC said wheat production is expected to hit 644 million metric tons in 2010-11--leaving its previous estimate unchanged--worsening prospects for corn crops in the U.S. and China are expected to lower world production. While still a record crop, the IGC cut its estimates for 2010-11 world corn output to 814 million tons from a previous forecast of 824 million tons. Corn output from the world's largest producer, the U.S., is expected to total 323 million tons this season, said the IGC, cutting its previous forecast by 11 million tons. China is expected to produce 162 million tons this year, 3 million less than the IGC's September estimate. Declining prospects for the U.S. corn crop has triggered a jump in prices in recent weeks.
A sharp downgrade in government yield estimates caused a mid-month surge in futures, with CBOT March corn now trading at around $5.77 1/4 a bushel. Analysts remain bullish on the prospect for corn markets. "Despite the aggressive cut in U.S. corn yields in the last WASDE report, further declines in yield estimates are likely," said Sudakshina Unnikrishnan at Barclays Capital. Still, demand is expected to remain robust. The IGC increased its corn consumption forecast for by 3 million tons to 840 million tons, up 3% from 2009-10, and said it expects this season's ending stocks to fall to a four-year low of 125 million tons.

Palm oil rebounds on soy, weather
KUALA LUMPUR, Oct 27 (Reuters) - Malaysian palm oil futures rebounded, after two straight days of losses, drawing support from a firmer soy complex and weather concerns.
"October exports could be either plus or minus 2 percent because exports data for the first 25 days showed a 4 percent fall," said a trader in Kuala Lumpur. "It is very hard to predict."

China's soy buying spree to curb vegoil imports
KUALA LUMPUR, Oct 28 (Reuters) - China's soybean imports smash records every year but if the country keeps up last week's pace of buying, its processors will have more than enough to crush into cooking oil, reducing imports of edible oil.
The world's No. 1 food buyer may be rewriting its shopping list at a time when a weaker dollar makes bumper soy crops from the Americas cheaper than processed soyoil from Argentina as well as Malaysian and Indonesian palm oil.

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